India Has Entered the Investing Chat (Part 1) with Krishna Bahirwani - 7investing 7investing
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India Has Entered the Investing Chat (Part 1) with Krishna Bahirwani

Krzysztof & Luke join Indians Invest Globally founder Krishna Bahirwani to learn more about how Indian investors are making their presence felt in the U.S. and international markets. 

May 16, 2023 – By JT Street

Krzysztof & Luke join Indians Invest Globally founder Krishna Bahirwani to learn more about how Indian investors are making their presence felt in the U.S. and international markets. 



Luke: [00:00:00] Hi everybody, and welcome to the latest episode of the 7investing Podcast. Pretty exciting. If you’re on video, you can see a preview. It’s not just Krzysztof and myself. This week we’re joined by a very special guest, Krishna Bahirwani. Have Krishna is a framework coach and an investor from India, but crucially, he’s also the founder of Indians Invest Globally a community dedicated to investors with global portfolios. I actually in met Krishna about a year agocuz I guested in one of his clubhouse discussions with his Indians Invest Globally colleagues. Um, I think you’ve got over 1200 members now. The other reason we wanted to chat to you today is you are also part of the core team at Delhi Investors Association, which is an investor body with over 20,000 investors as members. You’ve been a speaker at the 2022 Investing Accelerator Summit.

You’ve also spoken that public and private investor meets across the country. And basically you’re just a [00:01:00] passionate believer in the India growth story with a keen eye on global opportunities. And I think that is gonna be fascinating for 7investing podcast listeners and YouTube watchers, not just today, but in two weeks’ time.

We’re breaking this into two episodes so we can have a really deep, rich conversation about investing in India. I’m pumped. Krzysztof, how are you feeling?

Krzysztof: Oh, I’m so excited. I’ve, uh, I studied India back in, back in the college days and, uh, I think it’s just one of the most fascinating places in the world, and obviously for reasons that will probably become very clear, the very, best place to look toward investing opportunities going forward given, uh, what’s happening with China.

In other words, a decline there with a rise in India. But I’m getting ahead of myself. I can’t wait for this conversation.

Luke: Well, Krishna, welcome to the podcast. 

Krishna: Thanks, Luke. I’m so happy to be here. 

Luke: so I think I mentioned we’re gonna probably split this into two episodes cuz we, we [00:02:00] don’t want to constrain the conversation we’re gonna have today.

We’ll focus more on kind of the big picture India’s demographics, what the local retail investor mindsets like, and also think a little bit about the impact of Indian government policies on the investing market. And then when we come back in two weeks time, we’re gonna pick up on some topics such as, what’s it like to be an investor in India? Kind of challenges faced, maybe really exciting. What I’m very interested in is what’s the future of investing in India?

And then big teaser for part two. Krishna’s gonna share some interesting investing sectors in India. Hot topics, hot areas and sectors to look at, uh, if you are considering as an international investor, investing in this exciting market. Well, I’m looking forward to part one. Why don’t we, uh, crack on them and get started. And maybe just to kick us off, you could just tell us a bit more about yourself, Krishna and also Indians invest globally. 

Krishna: sure. I became an [00:03:00] investor in 2016. Um, you know, I used to be a journalist before this, uh, and that exposed me to a lot of information on a day-to-day basis. And, you know, seeing news go through. The newsroom, you’re sort of always up to date on what’s happening. Um, and you know, that gives you unique insight into the country. And, , it was then that I decided to start saving up and investing for myself. I mean, I couldn’t have imagined that I’d be sitting here, you know, uh, a couple of years later. Uh, but it’s, uh, especially since I have no traditional background in finance, um, like a lot of, uh, you know, other Indians, I pursued it, um, uh, right up until I dropped out to, um, to. Join a newspaper at first as an intern, and, and then I was given my own department and, uh, I set up my own section within the [00:04:00] paper.

It’s been a long journey since then. And, uh, you know, as I’ve invested, I’ve grown as an investor and now I know that this is a huge part of my identity and this is a huge part of, you know, uh, what I want to do. As far as Indians invest globally goes, um, you know, I’ve always been somebody who’s, um, had a global mindset and uh, uh, right around during the pandemic, uh, what happened was the cost to invest internationally went down substantially in India. There was an influx of different companies allowing you, um, you know, to be able to invest abroad. Sort of like the Robinhood moment in the us. Uh, we had it here with international investing 

Luke: and did, did that have all of the downside and complexity of Robin Hood specifically? You know, they didn’t build a great name for themselves with some of their policies and their approach to the, the way they navigated

Krishna: yeah, I think there, there were a bunch of complexities here as well [00:05:00] because, uh, generally, you know, international investing or. Um, you know, doing anything that involves complex flows of money in India is, is generally a cumbersome process. A lot of the, um, you know, while the costs came down, um, some of the investing, uh, as in the transfer of funds still had to be done manually, and the fees are pretty high, you know, uh, in terms of, transferring your funds, uh, internationally, especially when you look at it. Uh, compared to, uh, what people would want to be able to invest. So while we did get like, uh, zero brokerage and close to zero brokerage kind of accounts, um, transferring to the US still had all of its, uh, traditional fees. So while it did become something that, you know, was a lot more accessible than it used to be before, it still wasn’t something that the. Everyday [00:06:00] investor could participate in, it’s still a very, like selected group of higher net worth individuals who could, uh, you know, um, go and explore international 

Luke: So that the market’s mostly made up of all these rich X IT graduates who are, uh, plowing their earnings back

Krishna: Yeah, I mean, I mean the markets are pretty diverse and, and they’re also pretty young. Um, you know, because when, when you look at, in, uh, the Indian stock market as a whole, uh, I think we have about 110 million investors, uh, right now in India. Uh, this is in the Indian stock market, , and, , I think it would be about 140 million, , in the mutual fund industry. Uh, so you have more people than India investing in mutual funds than in direct stocks or ETFs. Uh, ETFs are far less popular here than, um, neutral funds are. Um, so, but you know, this 110 million number, um, a decade ago [00:07:00] would’ve been something like 20, 30 million. So it’s, it’s, Um, gone up dramatically. I think even The last year number, um, November to November, which would be 2021 to 2022, I think was. Uh, 34% plus kind of growth in terms of the number of, um, investment accounts, which we call DMA So it’s a young market, in that, you, you get a pretty diverse sort of investor profile.

Um, another very interesting fact about India is roughly only 5% of, Indian assets are in equity. um, so you have three and a half percent in cash and 4.8% roughly inequity. So it’s, it’s still a very new asset class for Indians. I think gold is like three times that, and I know property is, 10 times that, 

Luke: I’ve got a, couple of very close Indian friends who are sort of, uh, British-born Indians, but we always joke with my friend Duniya that [00:08:00] her, her riches are in gold and she’s gonna sink her safe into her garage and kind of bury it physically. She’s a bit of a dor when it comes to what’s happening in the world. gold is popular culturally as an investment. 

Krishna: that’s changing with, uh, with this current generation, like the average age of an Indian, in India right now is uh, about 28 years. I’m about a year and a half, two years older than that a lot of the investors coming in right now are, are my age, uh, and, uh, their disposable incomes are rising. Um, you know, they’re also the, uh, the people that make up the majority of the workforce. So disposable incomes arising, it’s, it’s all coming together. Um, into a, a really interesting picture. Just to like simplify the demographics of india, you could look at it as, um, you know, three or five different Indias.

Um, because, um, When you look at the top 20% of India, um, you’re, you’re [00:09:00] looking at, Families making around $15,000, uh, which would be your, uh, your top 20%. And, um, you know, the, the top 2% or top 1% would be like, double that. And you have various sections of the of society, which are, uh, sort of like different Indias, because India’s per capita income is about $2,000. over the next seven or eight years, that’s going to more than double to about $5,000 

Krzysztof: Krishna, I have an idea because you start talking about demographics. I just want to set the table up in the, in the broad picture, just very, very broad what I want to say is that from an investing standpoint, there’s an adage that says, look where the demographics are, the demographics rule, everything. And what that means in a very general broad sense is that when you have an aging population or declining [00:10:00] population, you basically have fewer workers or less capital in the system. As an easy example, take a look 

at Japan in, uh, in the eighties, nineties, there was a rise in, its. Uh, technological know-how, but as the population aged, then people were having fewer, fewer kids. You look at it now, and there is this, there’s this in a sense, decline in, in, uh, opportunities, same, kind of thing is seeming to happen to China, that the population is getting older.

Meanwhile, as I’m sure Krishna, you’ll, you’ll explain with great depth in, in, uh, firsthand experience, India is the opposite situation. You have a very young population that is booming, and so from the investment standpoint, that’s kind of like just a great place to start. Demographics.

Krishna: Uh, yeah, absolutely. Like the average age of, um, of an Indian right now is 28 and a half years. Um, and you know, if you, if like [00:11:00] you look back to your own life, that’s probably the time where you really started to make money. You know, uh, you, you had put in all the time the work, the energy into sort of building yourself and that was sort of the time where you started to make money.

Um, also what’s really interesting is, um, the demographics in India in terms of the uh, the working age population hasn’t even peaked yet. It’s the best that it’s ever been right now, but it’s expected that it will peak, uh, around 2030, 2031, with about 69 to 70% of the population being in the workforce. , which is an absolutely staggering number. This is a population that’s hungry to consume. They’ve lived on $2,000 per capita income. Uh, which, if you take by purchasing power parity terms is equivalent to like $9,000 us. , in terms of living standard. And, you, know, as this, this amount sort of [00:12:00] doubles, uh, a little more than doubles in the next, um, seven or eight years. that’s a huge amount of like disposable income that’s going to come online, and that’s also going to dictate the investing opportunities in India in a really, really big way. Um, it, you know, it just to like, uh, paint you guys a little bit of a picture of the last 50 years of the Indian market, the really big winners have been, you know, uh, consumer staple companies, export companies and infrastructure companies, with the exception of one. Gold retailer, gold jewelry retailer. Like we joked about how gold is a big, uh, aspect. uh, you know, in India, um, three times, the amount of money that’s inequity is in gold. Um, that is a, that is the only sort of, uh, you know, segment of, uh, consumer discretionary that’s [00:13:00] actually done really well over the last 50 years, which means the whole, gamut is of discretionary consumption is still open, uh, for indians, you know, um, to be able to spend on, and I think that makes it a really, really interesting economy. India, like the US is, is a 60%. Consumer driven economy, unlike china. So a lot of the growth is gonna be driven by people’s consumption. 

Luke: And, I suppose as people become richer and you have this emerging middle class, um, would you say that there’ll be more focus or opportunity for consumer discretionary firms and like a almost startup ecosystem? I. 

Krishna: Absolutely. Along with the middle class, the wealthy population in India is going to five x in the next seven years, which is insane. Like when you think about it, uh, the number of people earning, uh, the equivalent of, um, you know, $35,000, [00:14:00] um, is going to five x in the next seven years.

I’m not exactly sure if this is on purchasing power parity terms or if it’s on, uh, you know, um, Just taking GDP as it is. But either way, that’s like a huge, uh, boost to the upper echelon of consumption. And you can see that in like, um, the prices of, of certain hotel rooms, uh, in India. Um, you know, if you wanted a hotel room right now in, in Mumbai, uh, at one of the top three hotels, it would cost you about 400 to four 50, $500 US for a standard room, which is what you would expect in, in New York or, you know, um, LA or San Francisco.

India’s a very, very big country and therefore, you know, you can have like, almost like many small countries and small economies within it. So while the middle class story is the huge story, you also [00:15:00] got a parallel affluent class story sort of playing out.

Luke: And um, uh, and I suppose it’s a tech savvy. , demographic, you know, this sort of younger cohort of a folk particularly, you know, like a lot of wealthy people coming out of the IT sector. That’s a huge industry in India. Do you see technology firms is benefiting perhaps to a greater extent than, um, some of their peers in more traditional industries? 

Krishna: Um, it, it’s, it’s a little complicated. Um, you know, because, um, the amount of competition and disruption in the tech firms is much, much higher. Um, so, you know, as an investor, uh, um, or you know, as an entrepreneur, you have to take that into consideration. Um, the competition and the more capital intensive, the more traditional firms, um, you know, you would say is comparatively lesser. Um, and the scope for disruption is a [00:16:00] lot lesser versus what it would be in, um, you know, uh, in the new age tech companies. 

Uh, just to give you an illustration, um, you know, I’m not invested in any of the high tech growth, uh, stocks in India while that forms the primary segment of my international portfolio, uh, because of how high the disruption is. And, you know, you could spend a really, really long time building something up and then forget about Like competition disrupting you. The government might disrupt you, you know, 

Krzysztof: Hmm. 

Krishna: In India right now, the government is, is building something called the India Stack. Uh, which is a sort of like a software layer to the entire country. So you’ve got tech-based authentication of people, which is the Aadhaar system. If you want any government benefits, you know, you wanna apply for any government schemes, government services, [00:17:00] uh, you just use this Aadhaar, uh, system, which is a lot like the US Social Security number, but this is a digital platform that connects to all sorts of other things Like banking, investing, uh, and so on. Uh, just to give you an, example and, uh, you can tell me how it is in the us or in the uk. But, um, you know, you can open today an investment account using this India stack in 30 minutes. Your entire authentication paperwork. Uh, screening approval is all done online and you are ready to go in 30 minutes. When I talk to my friends abroad, they say that’s like, that’s insane. You know? 

Luke: It’s very impressive. I, I think the UK are somewhat advanced. Maybe you couldn’t do it in 30 minutes, But, you could probably get there in under a day. But go on Krzysztof. Tell us about how archaic the systems are in the us.

Krzysztof: Oh, they’re fantastic. I love waiting at the dMV line, uh, for four hours to get, [00:18:00] uh, my license corrected. That inverted my first and last name, so, so that makes, yeah, that makes the uS seem like a third world country.

Hey, Krishna, could I rewind? Or maybe it’s a segue. The thing that is, seems most impressive to me right now in terms of tech is the fact that, uh, India, according to my my research is now, has now approximately 750 million users, uh, online, which is a huge, huge shift in just the last couple of years.

And to put that into perspective, that’s, you have China at about a billion. India, 750 million, and then the US is somewhere around, uh, 270 million. So it’s not even close. And I guess the question to you is that kind of, world in which only a few years [00:19:00] separates nearly a billion people from being not online, to online, that has to have repercussions that are not accounted for yet in the global economy. How do you think of that? 

Krishna: Yeah, absolutely. So, uh, we had something in India known as the geo moment, um, which was a moment, uh, uh, you know, uh, the telecom industry was sort of old and archaic, you know, the very little disruption. Um, a gigabyte of data costed like, I don’t know, 10, $15, um, at that time. And, for most of India, it was like not possible, uh, to access and India in that way, leapfrog the, the computer generation. And, uh, I think a vast majority of the users that came online were mobile first. And all of this happened because, um, uh, Reliance, which is one of India’s largest, uh, [00:20:00] companies, decided to get into the, uh, the telecom space. Um, and just for the re uh, listeners to just clarify, um, there are two, uh, Reliance companies. There used to be a Reliance Communications, uh, which was in the telecom space, but that’s sort of shut down now. They both owned by two different brothers. Um, uh, the other brother decided to get into the telecom space, uh, and he was the one who was into, you know, uh, oil and petrochemicals before that, and, uh, made this absolutely insane sort of CapEx layout. And then came to the market. And today we have the cheapest data cost in, in the world, and we are unlikely to be like, uh, challenged in in that segment because, he took data and he practically made it free. You know, like from $15 a gigabyte today, an average data plan on, on postpaid would give you like two gigabytes a day and would [00:21:00] cost $15 a month. So like, that’s the, the level of productivity. So we’ve added 60 times, , increase and how far our money goes in terms of buying data. 

Luke: I suppose a smaller side on that topic. One of our colleagues, Anirban, was recently tweeting about the iPhone moment that seems to be happening in India now, where I think two Apple stores have recently been opened. And there seems to be a huge demand for Apple’s products, I guess, you know, the fo, the handsets themselves going hand in hand with this incredibly low data costs. 

Krishna: Yeah. Yeah. Um, uh, they sort of go hand in hand and, um, you know, like I said, India is a, is a con um, high consumption country. You’ve got a lot of, uh, use users who are. Actually in the affluent segment also, um, you know, because, uh, like you pointed out, a lot of the people who are earning the money are in the tech industry and therefore this would be something that they would, uh, enjoy [00:22:00] spending their money on. Um, they send real estate and bangalore, which you can see in the prices of real estate at Baglow. 

I expect that by the end of this decade we should be, I think even Morgan Stanley said we should be somewhere around 900 million people, that are online, 

Luke: so we’re starting to sort of touch on the topic of how investors think and their kind of backgrounds, I suppose, the sort of retail investor mindset. So maybe just to sort of broaden that question out a bit, and maybe we can start attacking it from a few different angles. You’ve told us a bit about who retail investors typically are. What’s, what’s people’s kind of risk appetite and the types of investing preferences they might have, and what sort of decision making processes do, do people use when they’re trying to determine where or how to invest? 

Krishna: Um, so, uh, we could, we could bucket people in two different buckets to make it simpler. Okay? So you’ve got the, the population that’s earning and investing, um, and you’ve got, uh, essentially people who are assets and they’re transferring them to [00:23:00] equity. Um, okay, so these are the two broad buckets because, uh, like I said, the average age of an Indian is 28 years. so a lot of those people are earning their money right now. Um, jobs are becoming increasingly more well paying as remote work takes off around the world. 

Uh, india is uniquely poised to take advantage of that because a lot of indians speak English. And, you know, they speak English fluently, they understand English well, so they can take, um, you know, international jobs in the way that other East Asian countries may not have been able to. Uh, they’re also well-versed with outsourcing, you know, as India is a big hub for outsourcing, uh, it talent, customer service, things like that. Uh, so, they are, um, making more money than they used to before because it’s still very, very, very cheap for, uh, you know, international companies to outsource to india.

And these investors, [00:24:00] they have a higher risk appetite because they’re younger, they’re, earlier on in their careers and they’re less worried about, you know, where they’re going to end up because they have fewer responsibilities. And at the same time, you have this other segment of society which was traditionally living off bank deposits. Um, because, you know, bank deposits in India used to have a really high interest rate. Even today, you can get around like seven, seven and a half, 8% on a bank deposit.

Um, so, you know, uh, you have some part of that population that’s coming into the equity markets, realizing that, you know, uh, you can make a higher return and you pay a lower tax rate, um, on your equity investments as opposed to your bank deposits. Uh, your effective tax rate could be triple on your bank deposits as opposed to your equity investments. Um, so that’s driving a lot of investing there. And, um, [00:25:00] that’s a very different kind of investing, uh, very risk averse, uh, primarily investing in, uh, consumer staples and banks, which, which are like, considered safer investments, uh, in India. So you’ve got, uh, two different sort of groups of people simultaneously entering the market for the first time. 

Luke: And that is a very high interest rate you can get in a bank account. Is that, is that a recent phenomena because of sort of inflation and, and those sort of macro events or has it always been quite 

Krishna: So it’s always been quite high, it did go a bit lower. You know, during 2020, uh, we reached about 5%, I think. I don’t think it ever dipped below five. So five would be five to 6%, uh, as a range depending on which bank you sort of go for. Uh, now that’s between seven and 8%. So the lowest we’ve ever had, I think is between five and 6%.

Luke: It’s really fascinating when you, And if you just [00:26:00] think about, say, the S&P or some other big indexes, if you’re just investing in indexes, you might expect to get eight to 10% as an average year after year. If you could almost get that on a risk-free basis in a bank account, why would you invest at all? 

Krishna: Absolutely. So that’s, that’s what kept pe uh, a lot of people away from it. Um, also, you know, we had a, a lot of the older generation experience this, uh, thing called the Harshad Mehta moment in, in, in India where, , there was a big sort of stock market, , manipulation incident that happened in the nineties and that scared an entire generation out of the market, uh, because I think after the aftermath of that whole thing led to a 50% drop in the index. Which for a lot of people would be like, okay, we’re never entering this space again. you know? Um, especially if they were leveraged, you know, if they didn’t understand what they were doing [00:27:00] well. So I think that kept a lot of people away from the market. 2008 kept a lot of people away from the market. Um, and of course, interest rates were great outside, so there wasn’t a reason to come into the market, per se.

I would also wanna add one more thing, which is the, the awareness around real returns has increased. So, you know, while you might be able to get five, 6% on a bank deposit, uh, inflation adjusted, that could be 0%. So we have four to 6% is our, uh, what the RBI targets. Like, uh, you know, the Fed targets 2%. We target between four to 6% in India. Um, so the understanding of, you know, uh, Real returns is started to increase in India and therefore, um, I think that’s also influencing, uh, equity participation.

Krzysztof: Yeah. And to tie that in with this, uh, connection of So many hundreds [00:28:00] of millions of people to the internet as technology gets more advanced than all the apps and the, you know, iPhone, I guess becomes, , not commoditized, but normalized, the ease of access to all this stuff that, you know, brokerages, like robinhood brought, brought to bear, uh, in a population that is young and comfortable with that technology, it seems to me just a massive, massive a setup for people being comfortable with investing in a way that, that, that you know, going from zero to a hundred basically in the span of a couple of years. Does that sound accurate? 

Krishna: Absolutely. I agree with you a hundred percent. I wouldn’t change a word. 

Krzysztof: Okay. Awesome. Can, can I, set up, uh, the topic of governmental policy? and, I, I wanted to do that by thinking comparatively, uh, China [00:29:00] compared to India, and I’m very ignorant, uh, about most of this stuff, so please correct any generalizations. But the way I sort of think about it now is that you have China in terms of population staggering over the rest of the world. And it changed the world. Uh, when China basically start to become a developed country, the entire world’s global system and manufacturing processes changed. And that came with, uh, really serious downsides like climate, uh, change and, and pollution and all of that. But leave that aside for a second. But what’s interesting about, China is that we know they’ve walled themselves off predominantly

One, the great firewall of the internet. They, the, the most Chinese people are, not participating in a global conversation. And from the English speaking perspective, Chinese is also a big barrier in terms of language and culture [00:30:00] compared to India. Now, the world’s most populous country has policies that are almost the opposite of China’s there. And this is where you may, might provide some nuance for us, but one, there’s no, there’s no firewall and there’s English speakers. It just seems like India is the new giant that is, that is not yet the giant, but the barriers that the previous giant has set up simply do not exist.

Krishna: Yeah, absolutely. In a lot of ways, um, I think India is open, uh, to collaboration. Uh, and you can see that in the, in the way that government policies are, are happening.

India’s very happy for, you know, international companies to come in to work here, to collaborate with indian companies to grow. Of course, they want, you know, India to grow as well. Uh, and, uh, you know, Indian [00:31:00] companies to grow as well, but they’re, they’re not like in any way closed off, to international companies to international investment. And you can see that in foreign direct investment limits, which have been opened up. And they’re allowing a lot of, um, you know, foreign investment in the country. And I think the government is constantly, proactively thinking about in, in areas like technology, electronics, uh, defense, how can we collaborate with our European peers, our American peers? 

And, um, you know, sort of grow together, which is again, you know, a very, very different approach, uh, from the approach taken in China Um, like I was looking at the sectors that are closed off, uh, you know, to foreign investing, um, or to foreign direct investment. Uh, and I could only find two, which are like, um, you know, minuscule, um, [00:32:00] the gambling sector and the cigarette sector. Uh, that’s it, you know, everything else is like open, uh, to international investing. Of course there are different, there are different limits depending on how sensitive those sectors are. The limits are lower, um, you know, um, the more critical the infrastructure gets for the country. But, you know, uh, stuff that’s not so critical, you know, in terms of, uh, the security or functioning of the country. Those are, those, those are a lot more open, um, for foreign collaboration. So in that way it’s a very different economy.

Krzysztof: Hey, Krishna, you used the phrase, the government, you know, can you, can you tell us just a little bit, uh, more about Narendra Modi. My understanding is that he’s extremely popular, more, uh, more popular than maybe most political leaders. And I guess everything starts at the top. Can you give us some color about his, his vision for the country and [00:33:00] what you see him doing and, and how he’s shaping government? 

Krishna: uh, sure. So, uh, you, know, just to give you uh, another staggering stat, you know, um, I think we were, uh, I, I don’t remember exactly what the rank was, but we were over, um, you know, a hundredth rank in the ease of doing business ranking. And, um, ever since he came, you know, he, he made it his mission to sort of improve the ease of doing business ranking. Today we are about 63rd. Um, I’m not sure what the exact jump would be, but I, think it’s like 70 spaces in the time of seven years or something, which is which is crazy, you know, like the kind of ambition. Um, that he has for the country is, is really, really strong. I think one of the things that inspires the indian people, Indian people are really hardworking people because, you know, as you know, the the per capita income being where it [00:34:00] is and the, the sure size of the population, and India is a labor surplus country. So people generally have a working hard ethic. So when they see that prime Minister, you know, who first of all was, you know, has risen from, uh, absolute poverty, you know, he was a tea seller. Um, so tea seller to Prime Minister in itself is a huge, huge, huge story.

From there, uh, he’s also someone who’s really, really hardworking. Um, he’s constantly putting in effort, uh, and people can see that effort on the ground. Arguably the, the only comparable prime minister to him in the history of India was the Prime Minister that founded india, you know, the the first Prime Minister of India, Jawaharlal Nehru. and uh, I wouldn’t be surprised if it, during his tenure, um, he overtakes, Jawaharlal Nehru in terms of his popularity. uh, yeah, so he’s someone who leads, uh, from the front. [00:35:00] Um, he’s very unafraid, um, you know, to take bold decisions. Uh, India was also a country that was traditionally, uh, plagued by corruption, uh, where you would have, you know, politicians bringing in family members, uh, and things like that. And, you know, uh, India being a socialist economy up to like 1991, uh, they used to hand out certain things to family members and concerns of family members.

So, um, A, a big thing that aids Narendra Modi’s image is that he has no one to do that for. He has no family outside of, you know, um, his aging mother. Uh, I mean, he had a wife but he sort of separated with her earlier on and he doesn’t have anyone to, you know, sort of be, sort of corrupt for, and that aids his image a lot again in India because they know that, you know, who’s he gonna steal the money for, right. [00:36:00] And that, that makes people like a lot more enthusiastic. He’s a very, very, very popular, uh, leader. And, um, I, I, I don’t see his popularity diminishing at all.

Luke: Interesting. Could you see, we could go back and double click on that. Um, comment about the ease of doing business index, cuz that is a, you know, significant improvement. H how, what kind of policies have the government enacted? Is it like sort of taking out bureaucracy or what’s, what are the things have 

Krishna: Yeah. So, uh, that, uh, India stack, again, is a, is a big component in that. So, because the Aadhaar system exists, uh, you know, uh, in the middle, he also went on this drive, uh, as far as like sanitation and opening bank accounts go and, um, again, I’m not sure about what the exact stats are, but like, I think, uh, women bank accounts went from something like 40% to 90%. Um, you know, [00:37:00] what the India stack does is it allows people who previously didn’t have an identification document. Um, you know, to be able to get, uh, an identification document easily, to be able to use that to open a bank account really quickly. Um, you know, all direct benefit transfers don’t happen through checks, they all happen electronically. You know, you qualify for various schemes using the India stack. 

So it’s a very, um, you know, um, pinpointed effort to eliminating middlemen. And also I think, uh, you know, culture starts at the top and, um, sending out a very strong message that, you know, uh, we want efficiency. To just give you an example, you know, India again had a really bad reputation with its politicians. Um, but today, you know, our railway ministers Warwick graduate. If you told someone in India 10 years ago that’s going to happen, [00:38:00] they would’ve been like that That’s impossible. You know, that, that, and it’s a lateral entry into politics that is not a career politician.

But there’s, there’s so much political power and capital that the Prime Minister has built up that today he can go out and bring someone into the government, um, give them a cabinet level position, and they can really do the work.

um, arguably one of india’s most popular politicians right now, um, Mr. Jaishankar , the external affairs minister, you know, he, he was not a career politician. Uh, he was brought in from the civil services, uh, in a lateral entry. you know, Today, I don’t think if he stands. Uh, for an election, there would be any doubt in anyone’s mind to like that he’s gonna win. But to be able to bring such people in takes a lot of, , power and, uh, political capital, which I think he’s spending really well. 

Luke: And, and I guess a, little tongue in cheek, but, but genuinely, on behalf of all British [00:39:00] people, if I could thank you and your neighbors in Pakistan because your, people who are, if Indian origin are now running the uk, running Scotland, uh, are, are fantastic, uh, Mayor of London as well. So, uh, you’re helping rescue us from this absolute, uh, disaster we’ve created for ourselves politically over the last year or so. 

Krzysztof: Oh, yeah. It is interesting from the US-centric perspective that, uh, there’s some US companies, you, might have heard of them, that have, uh, uh, Indian CEOs at the top, little pebbles like, like Google and, Microsoft. Uh, but I also, uh, I keep coming back to this difference between China and India, and it seems like just a more, collaborative, um, emergent possibility between the US and India than there could ever possibly be with the US and China, in part because of the vastly different way that they [00:40:00] think of themselves in, in, in terms of government structure, that China will actually set up espionage, uh, in, um, totalitarian ways of. , controlling everything as in an adversarial nature. We know this with the TikTok saga, right? Compared to india seems to be inviting collaboration, and, if I reverse engineer things and I start with someone like Tim Cook, who probably knows the world’s manufacturing cadence better than anyone on the planet, and he’s now, uh, devoting so much time in the effort into establishing a real, genuine presence in India.

I believe some Apple stores were recently opened. It started with 1% of iPhones being made, now I think it’s up to 7% with a goal of maybe 25%. All of a sudden India seems like a legit partner, and You have this thing called [00:41:00] India America, right? Where, where um, it just makes so much sense to me. Am I missing something? 

Krishna: No, no, you’re, you’re absolutely right. But there, there are a few crucial government policies as well that have, uh, you know, played a role. Uh, as an investor personally. Uh, you know, the one that excites me the most, uh, is this thing called the production Linked Incentive Scheme. Um, okay. And, um, it, it.

Caters to specific sectors like automobiles, uh, specialty chemicals, pharmaceuticals, electronics, um, IT hardware, which, um, India wants to become stronger in. Um, and what the government is doing is they’re giving a 5%, um, incentive to, uh, you know, companies, if they hit certain benchmarks in terms of efficiency and scale, they need to hit these [00:42:00] benchmarks in terms of volumes in a time bound manner.

And they can get up to you know, uh, 5% of a benefit the government is investing, uh, in terms of their outlay about 25.9 billion in this, which means that in five to six years, they will produce, um, you know, manufacturing in these key targeted sectors of about 520 billion. The government is extremely pinpointed in, in the way that they, they work, uh, you know, you can see it in, in this policy.

And this is built to create an ecosystem for all of these things. So it becomes a lot easier for an Apple to move manufacturing here if every other electronic component is getting that incentive to be able to develop, uh, so that we can, um, bridge the gap between what a China has, uh, and what we need in terms of economies of [00:43:00] scale, uh, to be able to be, um, a valid contributor to the global market.

Luke: Fascinated Krishna. Um, hey, I think we’re coming up on time for our first part of this conversation, but we’d love to pick up with you in two weeks time. Hope our listeners can hold their breath. So we’ve covered some interesting topics today, but when we come back, probably the, the the headline part of this conversation for me, really to understand a bit more about the future of investing in India. And I think you’re gonna share some interesting segments and sectors, uh, that you think are particularly interesting right now in the country. Um, really looking forward to. To that conversation. Um, but for now, let’s bring part one to a close. Say a quick thank you. Um, if our listeners for part one would like to read more of your work or perhaps join Indians Invest Globally, where could they find you on the internet? 

Krishna: I think the best place is Twitter, at the rate @BahirwaniKrish. 

Luke: Superman. I’ll put a link to that, and the show notes. uh, we’ll be on behalf of Krzysztof and myself. Thanks so much for your time in this first part of our fascinating conversation.

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